Want a tip from an insider?

Once I read about a rather unusual fraud scheme. In essence, some 1000 random people would receive letters, 500 of which claimed, that stock A would go up, and the other 500 that it would go down during the next NY Stock Exchange trading day - all based on their new ground braking prediction models or insider information. Well, it is not hard to realize, that at least half of the predictions were correct!

Now, the smart guys would send letters only to those, who got the right forecast in the first round. This time it would be a stock B, on which they wrote something similar, also splitting 50/50 between up and down. And again, in half of the cases they would definitely be correct! So, there would be around 250 guys who had a couple of absolutely correct predictions, delivered to them free of charge, and some of them began to wonder, whether more should be expected.

And indeed, promises for more cool trading tips were given, this time in return for a symbolic sum of $100 or whatever. So, just by sending a few letters and spending so much on stamps, the gentlemen behind the letters could collect rather nice amounts of money from gullible of the world without much perspiration.

It is interesting to note, that recently a considerable percentage of the spam I receive talks about some investment tips - I suspect this is the same scheme, this time delivered via Internet, on much larger scale and with considerably smaller transaction costs.

A recent article from BBC tells us that some people don’t bother to do all this complicated stuff and simply sell nonexistent shares or extraordinary overpriced ones.

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